Keaton was born Michael John Douglas on September 5, 1951, to an Scots-Irish family in Coraopolis, Pennsylvania (near Pittsburgh), and studied speech for two years at Kent State, before dropping out and moving to Pittsburgh. An unsuccessful attempt at stand-up comedy led Keaton to working as a TV cameraman in a cable station, and he came to realize he wanted to work in front of the cameras. His first major role was as the hilariously fast-talking schemer Bill "Blaze" Blazejowski alongside nerdish morgue attendant Henry Winkler in Night Shift in 1982.

Keaton left Pittsburgh and moved to Los Angeles to begin auditioning for various TV parts. He first appeared on TV in several episodes of Mister Rogers' Neighborhood (1975), and cropped up in other popular TV shows including Maude (1977) and The Mary Tyler Moore Hour (1979). Around this time Keaton decided to use an alternative surname to remove confusion with well known actor Michael Douglas, and after reading an article on actress Diane Keaton, he decided on "Michael Keaton". His next key break was scoring a co-lead alongside James Belushi in the short lived comedy series Working Stiffs (1979), which showcased his comedic talent and got him into the casting for the co-lead in Night Shift. Receiving some acclaim for his Night Shift (movie) role, Keaton scored leads in the subsequent comedy hits Mr. Mom (1982) , Johnny Dangerously, Gung Ho (1986) and as the title character in the 1988 Tim Burton horror-comedy Beetlejuice, which starred Alec Baldwin, Geena Davis, Winona Ryder, Catherine O'Hara and the late Sylvia Sidney.

Keaton's career was given another major boost when in 1989 he was again cast by Burton, this time as millionaire playboy and crime-fighter Bruce Wayne in the big budget film Batman. After the Keaton casting, Warner Bros. received thousands of letters of complaint by fans commenting that the comedic Keaton was the wrong choice for Gotham City's creature of the night. However, their fears were proved wrong when Keaton turned in an acclaimed performance that many fans felt was particularly faithful to the comic books.

Keen to diversify his work and take on different types of characters, Keaton next appeared as a psychotic tenant in Pacific Heights, as a hard working cop in One Good Cop, and then he returned to wear the black cape and cowl again in Batman Returns (1992). The film series declined precipitiously under the otherwise well-regarded director Joel Schumacher, after Burton and Keaton left after being dissatisfied with the screenplays the new director approved. It has also been reported that Keaton left the series because Warner Brothers studios would not meet his salary demands, but other than that the official explanation is that he simply did not like the artistic direction the franchise was headed in. In a marked contrast to their initial reaction, many fans complaining about those films often demanded that not only that Tim Burton be rehired as director but that Keaton play Batman again.

He remained in demand during the 1990s, appearing in a wide range of films including the star-studded Shakespearian Much Ado About Nothing (1993), another Ron Howard comedy The Paper (1994), with Andie MacDowell in Multiplicity (1996), as a dogged cop in Jackie Brown (1997), and in the thriller Desperate Measures (1998). Since 2000, Keaton has appeared in several productions with mixed success including Live From Baghdad (2002), White Noise (2003), First Daughter (2004), and Herbie: Fully Loaded with Lindsay Lohan (2005).